From Baa1: outlook negative
- Cites increased medium and long term fiscal concerns, external vulnerabilities for Hungary downgrade
- Hungary govt relies on temporary measures; structural budget deficit is set to deteriorate
- Longer term implications of Hungary’s pension system changes are negative for public finances
- May again downgrade Hungary if govt fails to stabilise its financial strength
- Stabilisation of Hungary govt financial strength may be complicated by increased risk aversion from investors, fx pressures
- Could revise Hungary outlook to stable, eventually upgrade rating if country starts sustainable consolidation
- Hungary’s strengths include membership in European Union, strong FDI position